Commercial litigation handles all kinds of disputes. Whether your case involves a breach of contract, business tort, or partnership/joint venture dispute, there are 2 main options for reaching a settlement. The first is arbitration, which is generally quick, cheap, and private. The second option is litigation, where the case goes to trial. While arbitration has several benefits, it also has serious drawbacks that need to be considered before making a decision. In several cases, taking the case to court can provide many advantages. Our Marietta commercial litigation attorneys can discuss your options and help determine a beneficial course of action for your case.

Here’s What You Need to Know About Litigation & Arbitration

1. Concerns About the Costs

While arbitration has generally been cheaper than litigation in the past, recent studies show that costs for arbitration are increasing. Thus, it might not always be beneficial to pursue arbitration purely because of a lower cost. Filing an action in a particular court can actually be much less expensive than filing an arbitration claim. If you are debating whether or not to pursue arbitration, you need to research your court’s fees and the cost for filing arbitration before making a decision.

2. Concerns About Objectivity

In arbitration, it can be difficult to find a completely objective arbiter. You and the opposing party must agree who that will be, and it is often a retired judge or attorney. Some national arbitration groups market their services to specific clients, which brings their objectivity into question. Furthermore, it is hard to determine whether an arbiter that you and the opposing party agree on is completely neutral and unbiased. In litigation, the presiding judge must be neutral, and there are laws in place to prevent a biased judge from ruling in a case.

3. Concerns About Other Risks

When seeking a smaller settlement, many people think that arbitration is the most beneficial course of action. Hi-Low arbitration allows opposing parties to determine the highest and lowest amount of money each can get prior to the arbitration. The arbiter will not be informed of the amounts. Thus, even if the arbiter decides one party should get more or less than the pre-determined settlement, the parties will only be allowed to get what they determined beforehand.

While this can provide several benefits for parties seeking low damage awards, it can also prove risky. Your opposition can see how much you are willing to take or pay. If negotiations fail, this knowledge may hurt you in the arbitration process.

Another risk stems from many people’s misunderstanding of arbitration. Contrary to what some may believe, arbitration is not cooperative and amicable. In fact, it can be very antagonistic. While litigation strictly regulates the interactions of both parties, as well as ensures a neutral, objective judge, arbitration is much more flexible. This increases the risk of not having an objective arbiter, as well as the emotional risk of not having set boundaries for interaction with the opposing party. Thus, even when seeking a small claim, litigation can be more beneficial than arbitration.